Brexit extension removes ‘terrible outcome’: Lagarde

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The International Monetary Fund Managing Director said Christine Lagarde  “Brexit extension removes ‘terrible outcome’, giving cautious welcome to Brexit delay granted to UK for six months yesterday.

She added on a press conference at the International Monetary Fund (IMF) and World Bank Group annual spring meetings which is currently held this week in Washington, that the agreement removes the risk of a no-deal Brexit tomorrow, referring that it will give Britain more time to prepare for Brexit (whenever it actually happens….)

“At least the UK is not leaving on the 12 April without a deal…It gives time for continued discussions between the various parties involved in the UK.” Lagard added.

This new extension will allow “economic agents” in Britain, such as companies and workers, more time to “better prepare” for the future, she continues.

Britain’s already struggling economy would be pushed into a two-year recession by a no-deal Brexit, the International Monetary Fund has warned earlier this week.

The World Economic Outlook – completed in March before the latest developments in Brexit – predicted UK growth of 1.2% in 2019 on the assumption that a Brexit deal is done.

Growth in 2020 has also been revised down – by 0.1 points to 1.4% – since the fund’s last WEO in October, but the IMF said its projections were surrounded by uncertainty.

It said there were alternative no-deal scenarios in which the UK would be hit by trade barriers, customs delays, barriers to financial services firms and the loss of preferential access to non-EU countries under trade deals negotiated by Brussels. The impact of these would be enough to cause output to decline in 2019 and 2020.

It stressed that “a no-deal Brexit that severely disrupts supply chains and raises trade costs could potentially have large and long-lasting negative impacts on the economies of the United Kingdom and the European Union”

Earlier IMF chief has said that a no-deal Brexit is ‘obviously the worst case scenario’, adding that Brexit poses uncertainty for Europe and UK.

In addition, The IMF had warned in November that a no-deal Brexit would cost Britain 6 pct of GDP. The United Kingdom is due to leave the European Union on March 29.